Macro – Page 4 – Abnormal Capitalist

A Man in the Mirror

Bill Gross on our relationship to success, the heydays of investing and Michael Jackson :

Since the early 1970s when the dollar was released from gold and credit began its incredible, liquefying, total return journey to the present day, an investor that took marginal risk, levered it wisely and was conveniently sheltered from periodic bouts of deleveraging or asset withdrawals could, and in some cases, was rewarded with the crown of “greatness.” Perhaps, however, it was the epoch that made the man as opposed to the man that made the epoch.

→ PIMCO

Bill Gross: The Bond King’s Move to a New Throne

From Bloomberg’s Market Makers :

Celebrity sells. And it can sell mutual funds as well as it sells sneakers. Bill Gross helped build Pacific Investment Management Co. into a $1.97-trillion firm by becoming a star. He cultivated his fame with a busy media schedule and colorful commentary on everything from Paris Hilton to the U.S. economy’s “new normal.”

→ Bloomberg

How to Avoid Regretting Letting the Bull Escape

Psychologist Daniel Kahneman, who won the Nobel Prize in economics in 2002, likes to say that one of the keys to investing successfully is properly anticipating your regret.

The Wall Street Journal

Shadow Banking And The Global Financial Ecosystem

In either case, the fundamental problem we are dealing with is a financial ecosystem that has outgrown the safety net that was put around it many years ago. Today we have new types of savers (cash portfolio managers versus retail depositors), new types of borrowers (risk portfolio managers to fund pensions versus ultimate borrowers to finance investments and consumption) and new types of banks (dealer banks that do securities financing versus traditional banks that finance the real economy more directly via loans) to whom discount window access and deposit insurance do not apply.

These twin pillars of the official safety net were erected around traditional, deposit-funded banks to address retail runs. In contrast, the crisis of 2007–09 was a crisis of institutional runs where cash portfolio managers ran on dealers, and dealers ran on risk portfolio managers. But importantly – as the examples above demonstrate – beyond the institutional façade of the ecosystem it is ultimately real wealth and promises that are at stake.

→ VOXeu

The Fed’s Surprise and Yellen’s Challenge

To ask what Janet L. Yellen, the nominee to succeed Ben Bernanke as Chair of the Federal Reserve, has in store for US monetary policy is to pose the wrong question. The real issue is the decline of the Fed’s policy effectiveness.

→ Project Syndicate